I am an Ohio resident and trying to decide which 529 account to open for my niece. The CollegeAdvantage Plan offered in Ohio is rated highly (5 of 5 caps) by the www.savingforcollege.com website. The OH plan even allows for a $2000 tax deduction from state taxes (roughly 5-6%). However, I have one problem with it: annual fees.

I am looking to contribute around $50 2-3 times per year for each of my nieces and nephews (currently only 1 niece, expect more to come in the future). The annual fee for the Ohio plan is $25 per year UNLESS the account value exceeds $25,000 (not an option) OR a fixed minimum of $50.00 is contributed monthly (maybe an option, see below). An annual fee on such a small amount of capital would destroy any chance for a decent return (or any positive return, for that matter).

My priorities in opening such an account (or similar savings vehicle) are to provide some financial help to my nieces and nephews. My priorities are (1) an easy to manage account, (2) low annual fees, (3) a decent return on investment, (4) account allowing infrequent contributions, (5) low account balance in initial years, (6) ideally option to invest in an index fund (track S&P 500).

Please provide comments or advice on the following options:

A. Open a 529 account in another state (please suggest a state that meets my goals if you know one)

B. Open a 529 account in OH and make a $50 monthly contribution to avoid the annual fee. Take advantage of the OH tax deduction and split the account among my future children and my nieces and nephews at some point in the future. Some accounting on my part would be necessary to split the account in my desired proportions. (I don't know if this is even possible, please comment as to whether this is even available).

C. Forget about a 529 account and just provide my nieces and nephews with US gov't bonds or the equivalent. (Wait to use a 529 account on my own children)

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